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Treasure Bags are small purple bags which randomly drop from enemies when they die.
In regular quests, Treasure Bags contain Collectables which can be turned in for prizes at some specific NPCs.
When a Treasure Bag drops, all members in a group are able to pick up the same bag. A Treasure Bag disappears from your sight once you pick it up, but other group members who haven't picked it up yet can still see it and pick it up for themselves.
A Treasure Bag vanishes from sight after 10 minutes if you don't pick it up.